March 9th, 2010

Foreclosures Decrease Both Budgets and Property Taxes in Cities. The foreclosure mess is far from over, and the effects of walking away from your mortgage are devastating to not only you and your family, but your entire community as well.  Reports indicate that foreclosures decrease both property taxes and city budgets, making it harder to thrive in some urban areas.

Property taxes are the main source of revenue for many municipalities.  Police departments, education, citizen services, and transportation are all things that are typically funded through this revenue stream.  With less money coming in, cities are forced to re-evaluate their numbers and cut funding.

Don’t the banks pay property taxes after they take ownership of the property? Yes, they do.  The issue isn’t collecting property taxes – the issue is the decline in the value of property.  For instance, in Solano County California, home prices dropped 19%, meaning that the city has 19% less funding to work with, and therefore the government must be smaller.

New Jersey had to cut back on funding for education because of the decline in property taxes. This state is particularly known for its extraordinarily high property taxes – and even they are having difficulties.

Don’t think that the foreclosure problems will stop with areas such as Solano County California or New Jersey.  Each and every American city will have to deal with a decrease in revenue, and will have to be creative in how they balance their budgets.  Maybe this will mean that the property tax RATE will need to be increased, in order to pad the shortfall.  This could also mean a hike in local sales taxes or other types of fees.  It could also mean that some things that used to be free aren’t anymore.

Has your area been hit with foreclosure problems? How has the current mortgage crisis affected you? Feel free to leave your comments below.

Source:
TheReporter.com

Related Posts

Related posts brought to you by Yet Another Related Posts Plugin.